1. Substitution effect

The Slutsky equation decomposes a change in consumption caused by a price change (income effect and substitution effect). Find the substitution effect of a price change in the following cases:

1. ε^U= -0.7, ε_y =1.4 and budget share (b) = 0.2

2. ε^U= -0.9, ε_y = 0.8 and U = x₁^0.5x₂^0.5

Consider the following information regarding the performance of a money manager in a recent month. The table represents the actual return of each sector of the manager’s portfolio in column 1, the fraction of the portfolio allocated to each sector in column 2, the benchmark or neutral sector allocations in column 3, and the returns of sector indices in column 4.

a-1. What was the manager’s return in the month? (Do not round intermediate calculations. Input all amounts as positive values. Round your answer to 2 decimal places.)

a-2. What was her overperformance or underperformance? (Do not round intermediate calculations. Input all amounts as positive values. Round your answer to 2 decimal places.)

b. What was the contribution of security selection to relative performance? (Do not round intermediate calculations. Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.)

c. What was the contribution of asset allocation to relative performance? (Do not round intermediate calculations. Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.)

Located near a national park on the Yarra River, Colbee Hotel was built in 1915 by the Top End Railway. In an effort to supplement its lodging revenue, the hotel decided in 2012 to begin manufacturing and selling small wooden canoes decorated with symbols hand-painted by local indigenous Australians. Due to the great success of the canoes, the hotel began manufacturing and selling paddles as well in 2015. Many hotel guests purchase a canoe and paddles for use in self-guided tours of the Yarra.

Because production of the two products began in different years, the canoes and paddles are produced in separate production facilities and employ different laborers. Each canoe sells for $500, and each paddle sells for $50. the variable cost for canoe is $300 and paddle is $40, while the fixed costs are $80,000 and 10,000 for canoe and paddle respectively. $30,000 of common fixed costs for a customer service hotline used for both canoe and paddle customers.
The hotel's accounting system data show an average sales mix of approximately 300 canoes and 1200 paddles each season.

a. Use Cost-Volume-Profit analysis to calculate the break-even point in units for :
-The canoe product line only (i.e., single-product setting)
-The paddle product line only (i.e., single-product setting)

b. Use Cost-Volume-Profit analysis to calculate the break-even point in units for both the canoe and paddle product lines combined (i.e., the multiple-product setting).

c. If both the variable and fixed costs associated with the canoe product line increased by 5%, how many canoes and paddles would need to be sold in order to earn a target income of $96,000?

d. Calculate the hotel's margin of safety (both in units and in sales dollars) for Colbee Hotel, assuming the same facts as in Requirement b, and assuming it sells 700 canoes and 2,500 paddles next year.

a. Consider a population in which the frequency of allele B is p=0.7, and the frequency of the allele b is q=0.3. If W BB= 1, W Bb= 0.9, and W bb= 0.8, what will be the frequency of B after one generation?

b. If the allele frequency for a dominant allele is 0.84, what is the allele frequency for the recessive allele?

1. You are given the following table:

Variance of market portfolio return = 0.07

               Given the assumption of a single factor model, calculate the following:

1. The residual variance of each of the above stocks;

2. The expected return on this 3-stock portfolio;

3. The beta factor of this 3-stock portfolio;

4. The variance of this 3-stock portfolio.

Diana Cohen received the following revenue during the year (she uses the cash method of accounting). Consulting revenue reported to her on a Form 1099-MISC, Box 7 High-end Retail $32,000 Jensen’s Health Products $8,500 Strategic Solutions $3,750 Board of director compensation reported to her on a Form 1099-MISC, Box 7 Natural Sunshine, Inc. $6,500

During the year, Diana paid the following business expenses: Consultant-related: Airfare $2,900 Hotel $1,450 Meals $390 Parking $320 Diana drove 290 business miles for her consulting-related activities (she has documentation to verify) Board of Director-related: Meals $125 Hotel $225 Diana drove 315 business miles for her board of director activities (she has documentation to verify) Neither of Diana’s business activities required the filing of Form(s) 1099 to report payments she made during the tax year. In addition, Ms. Cohen drove a 2014 Lexus purchased on January 1, 2014 for all her business mileage. She drove the vehicle a total of 10,605 miles during the year for all purposes. Diana has written documentation to support the mileage amounts. She also has access to another vehicle for personal purposes.

You're the manager of global opportunities for a U.S. manufacturer, who is considering expanding sales into Asia. Your market research has identified the market potential in Malaysia, Philippines, and Singapore as described next:

The product sells for $10 and has unit costs of $8. If you can enter only one market, and the cost of entering the market, (regardless of which market you select) is $250,000, should you enter one of these markets? If so, which one? if you enter, what is your expected profit?

The maintenance manager at a trucking company wants to build a regression model to forecast the time (in years) until the first engine overhaul based on four explanatory variables: (1) annual miles driven (in 1,000s of miles), (2) average load weight (in tons), (3) average driving speed (in mph), and (4) oil change interval (in 1,000s of miles). Based on driver logs and onboard computers, data have been obtained for a sample of 25 trucks. A portion of the data is shown in the accompanying table.

a. Estimate the regression model. (Negative values should be indicated by a minus sign. Round your answers to 4 decimal places.)

c. Based on part (a), are the signs of the regression coefficients logical?

) In a market with three assets, the portfolios P₁ = (0.6, 0.3, 0.1) and P₂ = (- 0.2, 0.5, 0.7) lie on the Minimum Variance Set. The portfolios have returns 12% and 4% respectively.

a) Find the portfolio on the MVS with return 14%.

b) Does the portfolio P = (0.1, 0.4, 0.5) lie on the MVS ? Explain.

The accompanying table provides data for​ tar, nicotine, and carbon monoxide​ (CO) contents in a certain brand of cigarette. Find the best regression equation for predicting the amount of nicotine in a cigarette. Why is it​ best? Is the best regression equation a good regression equation for predicting the nicotine​ content? Why or why​ not?

Tar   Nicotine   CO
5   0.5   5
17   1.0   19
16   1.1   18
13   0.7   19
13   0.8   18
15   1.1   13
15   1.0   17
16   1.2   16
15   1.1   15
9   0.7   11
13   0.8   17
12   0.8   17
14   0.7   17
16   1.1   16
3   0.3   3
14   1.0   18
15   1.1   16
13   0.7   19
15   1.0   16
15   1.0   17
16   1.2   15
15   1.1   16
7   0.7   7
17   1.3   15
15   1.0   14

Find the best regression equation for predicting the amount of nicotine in a cigarette. Use predictor variables of tar and/or carbon monoxide​ (CO). Select the correct choice and fill in the answer boxes to complete your choice.

A. Nicotine = __ + (__) CO

B. Nicotine = __ + (__) Tar

C. Nicotine = __ + (__) Tar + (__) CO